While nearly 40 percent of homes are still underwater in Palm Beach, Broward and Miami-Dade counties, the number is slowly shrinking, the Palm Beach Post reported.

39.6 percent of homes were underwater in the fourth quarter of 2012, down from 41 percent quarter-over-quarter, new data released from Zillow.com shows, the Post said.

While data shows only modest improvement, the overall forecast is bright, per the report, the Post said. Another 23,674 South Florida homeowners should be out of the woods by the end of 2013.

“Negative equity is still very high, and millions of homeowners have a very long way to go to get back above water,” Zillow economist Stan Humphries said in the report. “As a result, negative equity will remain a major factor in the market for the foreseeable future.” [Palm Beach Post]–Guelda Voien